C o r p o r a t e S o c i a l R e s p o n s i b i l i t i e s

Section 135 Companies Act ,2013

Shifali Singh

SOCIAL RESPONSIBILTY

MEANINGCSR is a management concept whereby companies integrate Social and Environmental concerns in their business operations and interactions with their stakeholders.

Generally, it is understood as the way in which a company achieves a balance of ECONOMIC, ENVIROMENTAL and SOCIAL imperatives, while at the same time addressing the expectations of the shareholders and stakeholders.

MANDATORY CSR OBLIGATION

Universally applicable to all

companies

Section 166(2) (duties of directors)

Applicable to specified

companies

Section 135 (mandatory minimum spends on

specified CSR activities every financial year

DUTIES OF DIRECTOR

Section 166(2) requires a director of company :

To act in good faith For the benefit of its members as

whole In the best interests of

The companyIts employeesIts ShareholdersThe CommunityFor the protection of environment.

Criteria for applicability of CSR u/s 135(1)

Either of the following 3 criteria

Turnover during FY Rs. 1000 crores and more

Net Profit during FY Rs. 5 crore or more

Net worth Rs.500 crore

or more

Mandatory CSR obligation under section

135

Constitute CSR

Committee of Directors

Formulate CSR Policy

Undertake CSR

activities as CSR Policy

Mandatory CSR spends of

min. 2% of average net

profit in every FY

COMPOSITION OF CSR COMMITTEE

CSR Committee of the board consisting of:-

Three or more directors

Out of which at least one director should be INDEPENDENT DIRECTOR.

Exception:-

i. An unlisted Company or a Private Company

Not require to appoint Independent Directors

ii. A Private Company

Can constitute CSR Committee with 2 director

iii. Foreign Company

Committee shall comprise at least 2 person of which one shall be as specified in section 380(1)(d) and another person shall be nominated by the foreign Company

FUNCTION Formulate and recommend to the board, a

Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII.

Recommend the amount of expenditure to be incurred on the activity.

Monitor the CSR Policy of the company from time to time.

RESPONSIBILTY OF BOARD OF COMPANY

After taking into account the recommendations made by the CSR Committee, approve the CSR Policy for the company.

Disclose contents of such Policy in its report.

Place the Policy on the Company’s Website

Ensure that Company are undertaking the activities of policy

EXPENDITURE Company should spend in every financial year at least 2% of

the Average Net Profit of the company made during the three immediately proceedings Financial year

Preceding Three financial year is in pursuance of its CSR Policy.

Preference to the local area and area around it where it operates, for sending the amount earmarked for CSR activities

CSR POLICY SCHEDULE VII

Eradicating hunger, poverty and malnutrition.

Promoting preventive healthcare and sanitation

Making available safe drinking water Promoting education Livelihood enhancement project Empowering women Setting up homes and hostels for women

and orphans Setting up old age home

Ecological Balance Ensuring Environmental SustainabilityAnimal welfare Protection of Flora and FaunaProtection of National heritage, art

and Culture Contribute to specified Government Funds Rural Development Project And many more.

PENALTIES AND PUNISHMENTS

Contravention of section 135:-

Company who is in default or such other person shall be punishment with:

Fine extended to Rs.10,000

----And----

Contravention continues, further fine extended to Rs. 1000 for every day.

Thank you